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By Vivian Salama 

WASHINGTON -- President Trump promised to take "substantial reciprocal action" against France after the nation's President Emmanuel Macron signed into law a tax on American tech giants like Alphabet Inc.'s Google and Amazon.com Inc.

"France just put a digital tax on our great American technology companies," Mr. Trump said on Twitter on Friday. "If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron's foolishness shortly. I've always said American wine is better than French wine!"

Despite Mr. Trump's mention of French wine, it couldn't be immediately determined what the reciprocal action would target.

Earlier this month, France's legislature gave final approval to a new tax on large tech companies, making it the first in a series of proposed national taxes on digital services being debated across Europe.

Ahead of the vote, U.S. Trade Representative Robert Lighthizer said his office would investigate the tax under the same broad law on which the Trump administration relied for its trade conflict with China, claiming the measure discriminates against American firms.

France dismissed the threat, asserting that it is a sovereign state that makes sovereign decisions on tax matters.

The French proposal will apply a 3% tax on revenue that companies like Google or Amazon reap in France from such activities as undertaking targeted advertising or running a digital marketplace.

Following the president's tweet, the White House released a more detailed response.

"The United States is extremely disappointed by France's decision to adopt a digital-services tax at the expense of U.S. companies and workers," said spokesman Judd Deere. "France's unilateral measure appears to target innovative U.S. technology firms that provide services in distinct sectors of the economy."

"The Trump administration has consistently stated that it will not sit idly by and tolerate discrimination against U.S.-based firms," Mr. Deere added. "The U.S. Trade Representative has already launched a Section 301 investigation into France's digital-services tax, and the administration is looking closely at all other policy tools."

Write to Vivian Salama at vivian.salama@wsj.com

(END) Dow Jones Newswires

July 26, 2019 13:54 ET (17:54 GMT)

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